Time and exposure to a wide variety of real-world experiences make for great classrooms. Over the course of 25 years, and in some cases even longer than that, some of the greatest lessons the Next team has learned and shared include:
- Watch debt—Using leverage—incurring debt on an acquisition or for improvements—is a common practice that allows investment capital to go further. However, debt service obligations can become a challenge, particularly in climates like our current environment of rising interest rates. Therefore, it is critical to monitor debt levels and maintain a healthy debt service ratio often achieved by including both fixed and floating debt in the portfolio.
- Watch FOMO – Fear of Missing Out—It can be easy to get caught up in the hype of a new trend or acquisitions made by competitors that do not fit your investment criteria. Be wary of investment decisions that are made for “Fear Of Missing Out” on a popular but perhaps unsustainable trend. While it is important to continually monitor and, when necessary, adjust your investment criteria, do so on your own terms. Investments should be based on your own experience and values, ultimately rooted in your critical evaluation of market and economic conditions. In the business of allocating capital, it’s important to remember that there is an opportunity to make a different decision down the road.
- Be yourself, investors will follow—Securing investors for a fund or a single investment is a necessary and ultimately rewarding task. Investing for others requires mutual trust and authenticity. Most high-net worth investors are drawn to investment managers with similar interests, outlook, and philosophies. It is important to be yourself. The rest typically takes care of itself.
- There’s always another deal—It is not uncommon to focus on the deal that got away and second guess your approach and/or offer. But in reality, there’s a reason a deal didn’t happen … and very likely there is a better deal just ahead.